There’s no doubt that the coronavirus pandemic has had a profound impact on the way we live and work in our day-to-day lives.
Despite thousands of businesses closing and millions forced into furlough or facing redundancy, some budding entrepreneurs have spotted new opportunities to start out on their own. Google Search Trends data shows that interest in ‘how to start a business’ increased by 50% from the end of last year to the months covering the first lockdown, with interest in online businesses seeing a huge surge
Even established businesses who have been reliant on bricks and mortar stores have had to rethink how they keep and get in front of new customers. Research from Growth Intelligence revealed that 85,000 businesses have launched online stores or joined online marketplaces in light of lockdown closures.
So you’re keen to take the plunge and tap into the world of e-commerce but where do you start? This article will cover some of the essential steps for starting an online business from home.
Decide on a product you want to sell
E-commerce covers a broad range of potential ideas you can explore including physical products, professional services, or digital goods (e.g. apps or software). Next you’ll need to think about how you want to deliver your product.
For example if you’ve decided to break into the world of skincare, you’ll need to consider whether you want to be responsible for making your product as well as managing and storing your own inventory which will involve warehouse management.
Alternatively, you might consider the drop-shipping route which, put simply, is where you don’t actually own or hold the product – customers come to your online business to order the goods and you forward this onto the product partner or manufacturer to fulfil. You’ll also need to conduct proper research into handling returns, refunds and exchanges, which of course only apply to digital or physical goods.
Research your market and build your business plan
Once you’ve finalised your idea and have identified your target customer base, it’s important to spend time researching the market and economy. This involves thorough competitor research so that you can spot opportunities and gaps to help inform your business plan.
Depending on the kind of e-commerce business you want to launch, you may require funding to get it off the ground which means you’ll need a comprehensive plan for what you’re trying to achieve and how. Doing this extensive research at the start will help to show investors why your business is a worthwhile investment.
We’ve put together a Small Business Toolkit that includes a business plan template, cash flow forecast and e-book to help guide you through every step of the way.
Creating a well-thought out business plan is arguably the hardest but most important stage in getting your venture off the ground. It’s essentially a blueprint for the future of your business as it holds all the information a potential investor needs including:
- Structure of your business
- Summary of operations
- Market analysis
- Strategy planning
- Financial analysis and planning
- Glossary of terms
Plan your finances
If you’re in the very early stages of starting your business, trying to plan and predict your finances might feel like an impossible task, especially if you have no previous sales or records to go by. The ever changing lockdown rules also means many businesses being forced to continuously adapt and change their plans. Transparency is key here so be up front and honest about what you do know and fill in any gaps for what you don’t know with reputable industry data. Your financial plan needs to include the following core sections:
- Cash flow forecast: This details the specifics of all your financial activities including payments, loans, expenses to show how much money is coming into and flowing out of your business
- Start-up cost breakdown: This document outlines all costs required in order to get your business off the ground
- Break-even analysis: This is a calculation which predicts when your business is expected to break
- Profit and loss forecast: A document which shows details for income against outgoings where the final output is a prediction of profit and loss. A separate calculation from your cash flow forecast but sometimes mistaken as the same thing.
- Balance sheet:
Set up your business
You’ll need to make sure your business is set up and registered properly but it’s important not to rush and instead spend some time thinking about the structure that’ll work best for you. Registering as a sole trader is the most popular option because it’s quicker and more affordable – you simply register with HMRC and complete your own self-assessment each year with no additional fees necessary. Admin and tax is a lot less complicated but you will be personally responsible for your business and its finances.
Alternatively, you could set your business up as a limited liability company with Companies House which means that your business is seen as a legal separate entity from you. This means your personal assets and finances are protected.
Build your online store or website
You’ll need to think where and how you want to market your ecommerce business which means you’ll need to decide on setting up your own website or whether you want to sell via an existing marketplace like Amazon or ebay. If you’re selling a digital or physical product, there’s a range of advice available to help you decide on which platform is most suited to your idea.
Put everything else into action
You’ll also want to make sure you’ve got the right tools in place including choosing the right accounting software, purchasing inventory or any other equipment you’ve detailed in your business plan. It’s important to make sure that all your costs are properly logged in your system so that you can keep a close eye on your outgoings
Start selling and promoting!
Now everything is set up, it’s time to put your product out there and start promoting it. It’s important to refer back to your business plan and ensure that your sales targets and properly documented so that you can keep track of progress.